Are you ready to become a digital technology leader?
In “Designed for Digital: How to Architect Your Business for Sustained Success,” Jeanne Ross, Cynthia Beath and Martin Mocker offer a contemporary digital model for enterprises. Those who can obtain it will have the ‘right to win’ and who cannot will increasingly find themselves subjected to wave after wave of digital disruption.
Interestingly, the authors not only argue for the importance of architecture, but they also argue for a revised theory of management. This makes the book relevant to IT professionals and business leaders interested in digital transformation.
The book’s authors say that enterprises today are being bombarded by digital technologies. As a single mnemonic, SMACIT stands for social, mobile, analytics, cloud and IoT. The authors claim—as we are all seeing—that digital technologies have become a game changer because they deliver three business capabilities—ubiquitous data, unlimited connectivity and massive processing power.
If there is a potential for a business disconnect in crossing the digital chasm, it happens at this point. CEOs and CIOs must work together to enable the business advantage that can be created through digital technologies. They need to enable their enterprises to reimagine and change their corporate value propositions for customers.
A great example is GE. When GE Aviation built jet engines that could stream data about a jet engine’s condition, GE’s CEO asked what advantage all the data provides GE. After thinking about it, GE moved from selling jet engines to selling a service that keeps planes flying—completely changing their value proposition to customers.
The corporate goal increasingly needs to be figuring out how to reimagine existing products and services. Doing this will create better customer experience and new features that increase revenues and customer satisfaction. The authors say that digital offerings are information-enriched solutions wrapped in seamless, personalized customer experience. In sum, digital technologies can improve operational excellence and introduce new revenue streams at the same time.
The authors suggest the conundrum for legacy businesses is piecing together culture, insights and competencies to convert a successful predigital company into an agile, innovative digital player. According to MIT’s Center for Information Systems Research, roughly three-quarters of legacy businesses are either locked in silos or have their businesses connected with ‘duct tape’ and ‘band aids.’ The reality is most legacy businesses will not cross the digital chasm. They are not, in the words of the authors, designed for digital.
For these legacy organizations, the interactions between people, process and technology limit their ability to learn, discard, enhance, reconfigure and scale up. This is similar to what Gary Hamel suggested, that the practices of management need radical change. Hamel believes it is time to challenge long-standing management orthodoxies that constrain innovation. This is a dilemma the authors work to address in their book.
Part of the problem is that successful companies cannot afford to dump the value propositions that made them successful. In many software businesses, for example, a software licensing model has proved a tough habit to kick. At one employer of mine, that went private, the goal was to change their business model, but investor financial goals made it impossible for them to compete against new age software companies. Ian Mitroff said the problem is that the seeds of failure are found in initial company success. The list of companies for which this is true is large and getting larger. The problem is that incumbent enterprises become comparably more risk averse than new entrants (“Dynamic Capabilities”, David Teece, page 21).
